Motorola Inc. (NYSE: MOT) will be calling upon two of Carl Icahn's nominees for election to its board as part of a truce with the activist shareholder. Let's just hope their using Motorola phones: The cellphone-maker's shares have fallen nearly 50% over the past year thanks slowing sales. The decline prompted Mr. Icahn to recommend a spin-off of the company's Mobile Devices unit in order to unlock value and enhance both businesses.

"We are pleased to have reached this agreement with Carl Icahn," said Greg Brown, president and chief executive officer. "We look forward to continuing the process we announced on March 26 to create two independent publicly-traded companies and we are pleased to avoid a costly and distracting proxy contest."

Carl Icahn lost a proxy contest last year, but management's failures in 2007 increased the odds this time around. Management fought briefly with the activist, but ended up implementing his plan for a spin-off of the Mobile Devices unit. However, the activist was still concerned with the speed and manner in which a new management team is selected for the mobile division. As a result, he insisted that his own directors be elected to the board to oversee the process.

Motorola finally agreed today and the two announced a truce that will enable Icahn to implement his activist agenda while allowing Motorola to avoid an expensive proxy contest. The cell phone maker also agreed to seek input from the activist investor in connection with significant matters regarding the separation of the Mobile Devices business.

"This is a very positive step for Motorola in that shareholder representatives will have strong input into board decisions affecting the future of our company," said Carl Icahn. "In addition, the Motorola Board has also taken an important step forward for corporate governance in that the separated company which includes Mobile Devices will be essentially free from poison pills and staggered boards, both of which, in my opinion, serve to make democracy a travesty in corporate America."

In the end, this is great news for shareholders as they will finally have their own represented on the board. Meanwhile, a successfully spin-off should help both companies focus on their core competencies and improve their bottom-line. This has made MOT a stock worth watching over the next few months!

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